Wednesday, June 6, 2012

What if Bank Managers DID know what Bankers know ... and Still Behaved the Same?

Western Banks 'Reaping Billions from Colombian Cocaine Trade'

While cocaine production ravages countries in Central America, consumers in the US and Europe are helping developed economies grow rich from the profits, a study claims.

This is typical of resource flows outside the G7 - where up to 80% or more of net profits reportedly leave the country, to be hoarded rather than invested in reducing domestic Output Gaps.

"... financial regulators in the west are reluctant to go after western banks in pursuit of the massive amount of drug money being laundered through their systems ..."

Just another form of colonialism?

When the stakes are that high (no pun intended), even politics in supposed Democracies is reduced to colonialism. Yes, through the magic of modern campaign finance, even political parties, Congress, President, SCOTUS and gov-agencies are influenced - if not dominated - by profit momentum and the individual urge to hoard static assets.

How do YOU spell Control Fraud?

Since dynamic value always outraces static value, how do electorates transition to being all that they can be, instead of simply sitting on a growing Output Gap?

One logical options is to acknowledge every resource flow that exists - despite denial - and then regulate it, rather than being intellectually dishonest about the whole process?

"... huge profits are ... recycled by [international] banks which operate with nothing like the restrictions that Colombia's own banking system is subject to ..."

"The whole system operated by authorities in the consuming nations is based around going after the small guy, the weakest link in the chain, and never the big business or financial systems where the big money is."

Does that sound remarkably familiar to domestic, White Collar crime statistics? Must be a coincidence, surely. :(

If this study initiative is truly sponsored by the present Colombian government, look for the politicians involved to have a short career in office. Our US banking lobby is not a trivial enemy to arouse. Drones may already be programmed to target non-conforming economists such as these authors, and their political "handlers."

"... prohibition is a transfer of the cost of the drug problem from the consuming to the producing countries." 

That makes rather a mockery of all our supposed Foreign Aid programs, which become nothing more than a tiny diversion, distracting domestic attention from the dominant profit flows.

"... Wachovia bank .. admitted to transferring $110m of drug money into the US, but [not the] staggering $376bn brought into the bank through small exchange houses in Mexico over four years."

"But no one went to jail, and the bank is now in the clear. Overall, there's great reluctance to go after the big money"

Colombia's banks, meanwhile, said Mejía, "are subject to rigorous control, to stop laundering of profits that may return to our country. Just to bank $2,000 involves a huge amount of paperwork – and much of this is overseen by Americans."

"In Colombia," said Gaviria, "they ask questions of banks they'd never ask in the US. If they did, it would be against the laws of banking privacy. In the US you have very strong laws on bank secrecy, in Colombia not – though the proportion of laundered money is the other way round. It's .. hypocrisy, right?"

Secrecy? Selective prosecution? Hypocrisy? Why, more than anything else that sounds like American-style campaign finance!

With Britain having overtaken the US and Spain as the world's biggest consumer of cocaine per capita, the Wachovia investigation showed much of the drug money is also laundered through the City of London, where the principal Wachovia whistleblower, Martin Woods, was based in the bank's anti-laundering office. He was wrongfully dismissed after sounding the alarm.

Personally, I always wondered what was hidden under the Queen's hat collection.  Or stored at Buckingham and all the other palaces.  Now we know why the royal family has always been so "high" on British banking.

"We know that authorities in the US and UK know far more than they act upon. The authorities realise things about certain people they think are moving money for the drug trade – but the DEA [US Drugs Enforcement Administration] only acts on a fraction of what it knows."

Must be bumping up against policy, not just criminology?

Plus, we DO have to protect those TBTF banks, since the world would end if separation of banking and state was enforced.  There is no alternative?  Why does that mysterious woman, TINA, keep cropping up?  Is she addicted to drugs, or just the profits?

"It's taboo to go after the big banks," added Mejía. "It's political suicide in this economic climate, because the amounts of money recycled are so high."

After reading this, do you even know your country anymore? Where are all the economists discussing the dominant effect of fraud outside Gresham's city limits?

If  you can't stop voting for either political party in the USA, you may as well kiss your Democracy goodbye.   Forget the clowns, TINA is sending in the drones.
(hat tip Dan Flemming)


Tom Hickey said...

It's not generally recognized but economic rent includes ill-gotten gains that would not be been accrued if the law, ethics and best practices had been adhered to. Clearly, most of this is conscious and intentional, or people are monstrously stupid. That is not credible in large, putatively "professional" organizations with a bevy of highly paid lawyers.

Ryan Harris said...

The government did shutdown Stanford Intl Group -- counts for something in terms of cracking down on laundered drug money.

miller B said...

"The government did shutdown Stanford Intl Group -- counts for something in terms of cracking down on laundered drug money."

they must not be in the inner circle. gotta kill competition everywhere